Bluer Chips lag Nasdaq, Value Line as new highs are hit

MAAD & CPFL Review

 

Market Snapshot for session ending 7-11-13
 

Last

Day Change

%Change

S&P 500 Index

1675.02

+22.40

+1.36%

Dow Jones Industrials

15460.92

+169.25

+1.11%

NASDAQ Composite

3578.30

+57.54

+1.63%

Value Line Arithmetic Index

3871.92

+54.25

+1.42%

Minor Cycle* (Short-term trend lasting days to a few weeks) Positive

Intermediate Cycle* (Medium trend lasting weeks to several months) Positive

Major Cycle* (Long-term trend lasting several months to years) Positive

* Cycle status is based on S&P 500.

Market Overview – What We Know:

  • New highs were registered by all of major indexes Thursday with NASDAQ Composite making strongest showing on 1.63% gain.
  • Short-term trend is positive in S&P 500). To suggest reversal to negative bellwether must sell below lower edge of 10-Day Price Channel ((1602.69 through Friday). Intermediate Cycle remains positive until S&P declines below lower edge of 10-Week Price Channel (1602.90 through July 12).
  • Our short-term volatility indicator based on VIX data continues to inch deeper into zone of vulnerability.
  • Daily MAAD was 100% positive Thursday with 20 issues up and none down. Indicator recorded new high. Daily MAAD Ratio was “Overbought” at 1.82.
  • Daily CPFL data was positive by 2.08 to 1 Thursday, but continues to hold below new short to intermediate-term high reached June 11 and uptrend line stretching back to November lows. Daily CPFL Ratio was last marginally “Overbought” at 1.22.
  • Despite movement to new highs Thursday, Cumulative Volume (CV) in S&P 500, S&P 500 Emini futures contract, and Dow 30 failed to make new highs with pricing.

Market Overview – What We Think:

  • Strength to new highs by all of major indexes over past few sessions simply re-asserts Intermediate and Major Cycle uptrends in effect since last November and March 2009, respectively.
  • Confirming move to new highs by Daily Most Actives Advance/Decline Line (MAAD) after indicator did not break uptrend since last November underscores fact Smart Money was not selling as much from May 22 highs to June 24 lows as S&P pricing would seem to have indicated.
  • But short-term trend is “Overbought” and our short-term VIX-based volatility indicator continues to flirt with negative territory just as indicator pre-dated market top back on May 22.
  • Divergent action in Cumulative Volume (CV) in S&P 500, S&P Emini, and Dow 30 to extent prices made new highs, but CV did not is indication rally has been fueled by weaker hands in bluer chip issues. Fact CV made a new high in NASDAQ Composite index underscores apparent recent shift toward secondary issues into June 24 lows.
  • As a consequence, it remains to be seen if new highs are reflecting misplaced enthusiasm, or are merely a resumption of long-term advance on both Intermediate and Major Cycles after yet another short-term correction.


Index Price Channel Stops (10-Bar MAs of Highs/Lows ) Weekly Monthly
               

S&P 500 Index

SELL
1593.29

SELL
1595.10

SELL
1596.73

SELL
1598.57

SELL
1602.69

SELL
1602.90

SELL
1398.13

Dow Jones Industrials

SELL
14808.19

SELL
14817.67

SELL
14822.73

SELL
14831.42

SELL
14865.12

SELL
14890.41

SELL
12986.65

NASDAQ Composite

SELL
3365.63

SELL
3375.06

SELL
3381.85

SELL
3389.87

SELL
3402.69

SELL
3359.20

SELL
2969.08

Value Line Index

SELL
3626.87

SELL
3633.87

SELL
3643.85

SELL
3854.30

SELL
3669.12

SELL
3629.13

SELL
3030.14

Note: Stop levels, a function of the extant trend, are based on the trailing moving average price channels for the Highs or the Lows of an index. Whether or not a specific index is suggesting a “Buy” or Sell” is determined by whether or not index prices are above or below the current channel Stop levels. Stop levels should only be used as an entry or exit guide and in conjunction with other market entry and exit strategies.

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